Out of the following, which one is not a mode of reconstitution of a partnership firm?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Dissolution of partnership firm
Reconstitution means the agreement among the partners changes but the firm continues. Dissolution ends the firm itself: its assets are sold, liabilities paid and accounts closed, so it is not a way of reconstituting the firm.
Option (1) Change in profit sharing ratio among existing partners — A mode of reconstitution. The same partners carry on under a new agreement on sharing profits.
Option (2) Admission of a new partner — A mode of reconstitution. The firm continues with one more partner.
Option (3) Retirement or Death of existing partner — A mode of reconstitution. The remaining partners carry on the business.
NCERT (2026-27 edition): |